Homeowners urged to pump tax refunds into mortgage

Do you tend to see your annual tax refund as an opportunity to splurge some ‘free money’ on a few of life’s luxuries? With the world’s economic worries looming large, now may be the time to put any refund towards reducing your home loan.

"A tax refund is often seen as free money, which makes it very tempting to spend right away; however, it's important to remember that the refund you're getting back is your own money. Tax season is a good opportunity for people to plan ahead with an eye toward their future goals and financial health," advised Homeloans national marketing manager Will Keall.

The warning comes as Homeloans reveals the results of new research indicating that more than half of Aussies will use their tax refund to pay off debt rather than splashing out on consumer goods.

According to the survey, 52% of Australians expecting to receive a tax refund this year will use it to pay down debt, citing economic concerns and the rising cost of living as their motivation. Twenty-one per cent will save their refund. While one-quarter of those surveyed said they would spend their refund, only 10% said they would buy something for themselves.

The survey has also suggested that consumers remain cautious and wary of spending. Eight in 10 respondents to the poll said they were currently more cautious with money than they had been in previous years.

"Despite the relative strength of the Australian economy, international economic uncertainty coupled with the rising cost of living is having a major impact on our spending habits. Many of our survey respondents also had very real concerns about their job security, with redundancies already making an impact in certain employment sectors," said Keall, adding that many consumers felt it was "time to batten down the hatches" by reducing household or personal debt.

Are you battening down the hatches in preparation for tough times ahead? Have your say by commenting below, or joining the conversation on our property investment forum.

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